N.Z. 'losing face’ in cheese short-fall

Press, 22 June 1981, Page 2

N.Z. 'losing face’ in cheese short-fall

By

BRUCE ROSCOE

Tokyo The New Zealand Government and dairy .industry are on the verge of losing face with .Japan because the quantities of New Zealand cheese that Japan seeks to import this year cannot be supplied.

New Zealand's central trade argument with Japan, that it. is a “reliable supplier’’ of agricultural produce. is also losing credibility among Japanese Government agricultural officials. The big increase in demand for New Zealand cheese was sudden, but nonetheless predictable.

Australia, which until this year was Japan's biggest supplier of natural cheese, is withdrawing from the market. The long Australian drought has severely cut milk production in Victoria. On top of this. Australian Dairy Corporation economists have calculated that it is'more profitable to make milk into butter and skim milk powder for export to other markets than it is to produce cheese for export to Japan.

The chairman of the Australian Dairy Corporation. Mr Malcolm Vawser, told Japanese importers in Tokyo this month that Australia would first cut its cheese supply to Japan by 13.000 tonnes a year, or nearly half of the 27.000 tonnes it sold to Japan in 1980.

Mr Vawser. told Japanese trade journalists that New Zealand would have difficulty in making up the shortfall. Japan, he said, would have to turn to the European Economic Community for more cheese.

Dairy policy officials of the Japanese Ministry of Agriculture. Forestry, ’ and Fisheries last week confirmed that big orders would be placed with E.E.C. suppliers. in particular Belgium and the Netherlands because New Zealand did not have the capacity to export sufficient cheese.

The Australian withdrawal could not have come at a worse time for New Zealand. It has added strength to the view held by Japanese dairy co-operative’s that Japan may be unwise 'to rely on foreign suppliers for a primary product, according to Government agricultural officials.

The dairy lobby now has the exact fuel it needs to push ahead with its longsought cheese factory. Last year. the co-operatives planned to double Japan's natural cheese production with a new 10.000-tonne-a--year cheese factory. Although the Japanese Government earlier this year

refused to subsidise the factory. after big dairy processing firms withdrew from the scheme. the Japanese officials now admit that renewed pressure for subsidies may be hard to resist in the event of inadequate foreign supplies. The Central Union of Agricultural Co-operatives, which lobbied politicians for the subsidies.and won a promise of $32 million for a “cheese fund" and plant construction costs, is believed to be considering whether it should restate its case. Another factor in the Japanese Government's decision to scrap the cheese production plan, the officials concede, was the repeated, protests by the New Zealand and Australian Governments. The protests are now seen to have little significance. It is odd. also, that Australia should decide to pull out of a hard-won market because it is "uneconomic,” when Australia has wonhigher prices from Japan for its cheese than the prices New Zealand has accepted. Japanese Government statistics for 1980 imports of natural cheese show that, on c.i.f. prices, the E.E.C. was paid about $2380 a tonne. Australia $1956, and New. Zealand $lBll.